ROCKFORD — Winnebago County will pay $950,000 to a trio of property owners, including retired Sheriff Don Gasparini, to build a 72-space parking lot downtown and hand it over to the county.

The property, the former Hawk’s Nest restaurant at Church and Chestnut streets, was purchased by a limited liability corporation for $630,000 in 2005. It has a fair market value of $175,000, according to the Rockford Township Assessor’s Office.

The county’s $950,000 purchase price, which County Board members overwhelmingly approved in a voice vote last month, is based on a real estate appraisal that assumes the land is a new, commercial parking lot and not a shuttered restaurant. The price is meant to compensate the owners’ cost to demolish the restaurant and build a parking lot with lights and security gates.

County officials say the purchase was necessary to provide parking to county employees, who lost more than 100 parking spaces in June 2012 when the city shut down access to 369 parking spaces in the concourse parking deck adjoined to the BMO Harris Bank Center. The county is bound by its labor contracts to provide parking space to employees and had been leasing space at the city’s concourse deck, but much of the deck is now structurally unsound.

Downtown parking has been chaotic since then, especially on days where potential jurors are called to the county courthouse, Winnebago County Board Chairman Scott Christiansen said. That, and the rising cost to lease parking space, was the impetus for the county’s decision to buy land.

Officials say the purchase makes fiscal sense because the cost to buy the land will be cheaper in the long run than continuing to lease parking from Rockford as the city’s rates rise.

The former Hawk’s Nest is owned by Church and Chestnut Development LLC, which is managed by Gasparini, attorney Paul S. Nicolosi and Scandroli Construction owner Carl Scandroli. All three have given money to Christiansen’s campaign fund.

“Irrespective of who owns any of those parcels: This is a winner from a cash flow standpoint and it solves a big problem for us and that’s parking,” Christiansen said.

The county is paying the Hawk’s Nest owners $200,000 to demolish the restaurant and build the parking lot. The remaining $750,000 of the purchase price represents the property value according to an independent appraiser.

But the appraisal wasn’t a traditional value comparison of similar properties. The appraisal is based on hypothetical conditions — how much the property would be worth if it were a commercial parking lot leasing spaces at $53 per space, per month. That’s the rate the county currently pays for parking. The appraisal further assumes the owner can earn $15 per space by charging rent during more than 70 events at the BMO Harris Bank Center each year.

Page 2 of 3 - County officials feel $200,000 was fair based on their most recent construction of an 80-space lot north of the BMO Harris Bank Center. The county paid $251,000 to build 80 stalls and an additional $40,000 to hook up lights and electricity.

“We never wanted to get into the parking business,” Christiansen said. “But our choices were extremely limited.”

He said the county was forced to find its own parking plan because of the unexpected structural problems at the city’s concourse parking deck. He said the county couldn’t wait for the city to fix that deck or develop a new parking plan because it had immediate employee parking needs. The Hawk’s Nest was a logical location because it’s less than a block from the County Administration Building on Elm Street and in the same area as court services.

“We only have a certain area we can work with for employees, we have to stay as close as possible,” Christiansen said.

The city had also eyed the Hawk’s Nest location as a potential parking spot briefly last year, said Jeremy Carter, city traffic engineer. The city owns the municipal lot on the same block as the Hawk’s Nest and initially considered the former restaurant as a location for a parking deck.

What’s it worth?

Trying to determine the value of downtown parking isn’t easy. In April, Rockford aldermen rejected an offer to purchase the former Rockford Watch Company factory on Madison Street for $580,000 because they felt the price was too steep. The city would have spent hundreds of thousands more after the purchase to demolish the lot and create around 200 parking spaces to support a planned sports complex nearby.

There was far less debate among County Board members regarding the Hawk’s Nest deal. The board voted 16-3 last week to borrow $4 million, which will pay for the $950,000 Hawk’s Nest transaction, a $1.2 million acquisition of the Rosecrance Ware Center and its 105 parking spaces, $800,000 for manufacturer Excelsior’s building and improvements to its property, $6,000 for a small lot south of the Criminal Justice Center, as well as other capital improvements. The borrowed money will also help the county move its last remaining operation — the coroner’s office — out of the downtown Public Safety Building.

Those that objected to the plan did not question the purchase price of those properties, which were each based on independent appraisals. County Board member Steve Schultz, R-3, said he couldn’t support the county taking on an additional $4 million in debt at a time when the budget was already so tight that officials planned to dip into reserve funds to cover operating costs. He said he didn’t know who owned the Hawk’s Nest at the time of the vote, but was concerned when he learned who owned the property.

Page 3 of 3 - “Those kinds of decisions hurt our credibility with our constituents and with the public,” Schultz said. “It’s one of those things that I think we should avoid.”

Deal questioned

County board members questioned staff about the deal, but were ultimately satisfied that the county’s purchasing director Sally Claassen had proven the purchase was a wise investment, said County Board Republican Caucus leader John F. Sweeney.

Debt payments for the county’s borrowing plan will cost about $376,000 a year for 15 years. County officials calculated that it would have cost about $466,000 each year — or more depending on how much parking rates increase — if the county were to continue to pay to rent parking and storage space and stay inside the Public Safety Building.

“I can understand someone wanting to connect the dots and wanting to make assumptions one way or another about it, but I think in this case board members were not skeptical of the deal because of the obvious need for parking and the location of the property,” Sweeney said. “There’s a real need to figure out where we’re going to have parking for our employees. That parking lot is located where it is and it’s owned by who it’s owned by.”